Garmento Lafayette 148 aims for China

After years working through big chains, Lafayette 148 grows by selling its own wares.

Lafayette 148 CEO Diedre Quinn and her partners have increased the company's online revenue 15-fold since 2009, to $44 million.

In China, eight is seen as a lucky number. It certainly has been for the three founders of fast-growing clothing maker Lafayette 148 New York, two of whom are Chinese.

When they opened their business in 1996, they made sure to price all their chic designs with sums ending in an eight. And last year, when they opened a store in the company's SoHo headquarters, of course they put it way up on the eighth floor, where it quickly drew big-spending customers.

"It's amazing," said Deirdre Quinn, chief executive of Lafayette, noting that the shop has exceeded expectations since it opened last fall.

In recent years, Ms. Quinn has pushed the company in a whole new direction after years of wholesaling Lafayette's wares at department stores including Saks Fifth Avenue and Lord & Taylor.

Much of that strategy focuses on the vast Chinese market, where the company that Ms. Quinn co-founded with Shun Yen Siu and Ida Siu now has four stores. Three more will open by September. But that brick-and-mortar growth pales in comparison with what Ms. Quinn has achieved online. There, the firm's nine-year-old website logged sales of $44 million last year, 15 times the total in 2009. Today, online sales pull in nearly a third of the revenue for the profitable $146 million firm that 16 years ago was a Crain's Small Business Award winner.

With Lafayette's clothes selling at 400 stores, "we had maxed out the number of retailers in the U.S.," said Debra Clark, Lafayette's senior vice president of marketing. "The largest growth opportunity for us was to go direct to consumer," opening its own stores.

When Lafayette emerged on the retail scene in the late 1990s with high-end apparel aimed at career women in their 40s and 50s, it was late to a party. The market was already crowded by the likes of Dana Buchman, Anne Klein and Ellen Tracy—brands known as "bridge" labels, with goods priced just below luxury but still upscale. Lafayette's average price point hovers around $450, and it focuses on jackets and well-fitting pants. But in recent years, Ms. Quinn's erstwhile competitors have moved to the lower end of the market—leaving Lafayette with a wide-open space. "For women who want to have a contemporary, tailored fit, there's very few [options]," said Elaine Hughes, chief executive of retail executive-search firm E.A. Hughes & Co. "Even in stores [like Saks or Neiman], it's just private-label business [the store's own brands] at those price points."

Falling bridges

Though it has seen many other "bridge" brands disappear, Lord & Taylor has continually stocked Lafayette since 2001. Connie Hoza, senior vice president and general merchandising manager of ladies' sportswear at Lord & Taylor and Hudson's Bay, noted that customers are extremely loyal.

"They buy the brand because it has exceptional quality and a fit that doesn't change," said Ms. Hoza.

Lafayette aims to take that loyalty global. Focusing on China, a country where American goods are becoming increasingly popular, is paying off for Lafayette. Total retail sales in the nation rose 13% last year, to $3.7 trillion, making China the No. 2 destination for emerging-market retail expansion, according to a recent study conducted by consulting firm A.T. Kearney. Chinese consumers are interested in the sta tus and lifestyle represented by some American brands, such as Lafayette, noted Hana Ben-Shabat, a partner at A.T. Kearney.

Shanghai came first

Ms. Quinn and Ms. Siu, who manages operations in China (Mr. Siu died last year), began opening their own boutiques in Shanghai in 2012. They expect to open as many as six more in the country next year.

Though apparel design starts in the SoHo office, much of the company's creative work and all of its manufacturing are completed inside a 240,000-square-foot, state-of-the-art factory in Shantou, China, that Lafayette spent $10 million to build in 2008. Having started out making all its clothing in Chinatown in Manhattan, the company shifted east after Sept. 11—a move that coincided with the rising costs and shrinking workforce of the local garment industry.

As the neighborhood transformed into a tourist destination and real estate prices increased, "it was impossible to be profitable, so we evolved," said Ms. Quinn, noting that a garment factory that used to be next door is now a sleek hotel.

Part of the retailer's evolution includes opening its own store. The 4,000-square-foot space displays Lafayette's entire collection, including petite and plus sizes, and customers are often treated to a VIP experience of car-service pickup, lunch, and personal styling and alterations. All that pampering pays off: The average revenue per shopper comes to $1,825.

The company's 8 million catalog mailings each year, along with digital display advertising and social-media activity, have brought customers to Lafayette's website in droves and provided enough brand recognition to warrant further expansion. Ms. Quinn expects a second U.S. store to open sometime in 2016. She is also in talks with stores in Europe, Dubai and the Middle East to wholesale overseas.